Buying a home is a complicated, time consuming and sometimes confusing undertaking. Because loan applications take an average of 20-45 days to process, locking a loan is an important step to safeguard the borrower from constantly changing interest rates. A lock secures a specific interest rate and points on a mortgage for an agreed upon time period. Once a loan is locked, even if interest rates fluctuate, the buyer has a guaranteed rate as long as he or she closes on the loan within the designated time period.
Lenders offer options for the length of time a lock is valid, typically 15, 30, 45, 60 or 90 days. Generally, a longer lock means higher costs to the borrower because the lender takes a greater interest rate risk. Typically, there is no cost to lock the loan, however lenders may charge a fee up-front for extended lock periods (lock periods of 90 days or longer). This fee would be forfeited if the loan fails to close.
Working with a Lender
Buyers today have lots of lender choices beyond the corner bank. Online lenders abound. A borrower should choose a lender that offers a favorable rate with an excellent reputation for honesty and long-term customer service. Once buyers decide on a lender, they submit a mortgage loan application. Within three days of the submission, lenders provide a Good Faith Estimate (GFE) outlining, with as much accuracy as possible, all expected closing costs – such as lender origination fees and escrow costs.
Once a borrower asks his or her lender to lock the loan, the lender should provide the borrower with an updated GFE and Truth in Lending documents to reflect the new terms of the loan. When these documents are signed, the loan is officially locked. Borrowers should request a Mortgage Rate Lock Agreement to ensure no confusion or misunderstanding about the terms of the loan. With confirmation, borrowers can enter into purchase agreements with confidence, knowing the exact costs of their mortgages.
When to Lock a Loan
It’s difficult to assume how long it will take to buy a house. Even once a buyer finds the right house, the process can drag on. Sometimes sellers’ moving plans fall through or a home inspection reveals a major flaw that the buyer and seller need to negotiate.
Some lenders may allow buyers to lock once a loan is approved, but most buyers wait until they’ve chosen a home to buy and have signed an agreement with the seller. Otherwise lenders may charge higher fees for an extended lock period. If the lock term expires before the borrower buys a home, some lenders may consider extending the lock terms for an additional fee. Others require a borrower to re-lock at the current market rate or the original rate, whichever is higher. Therefore, it’s not always the best choice to take the shorter lock period, even though it may be cheaper. Alternatively, borrowers might want to lock a loan before they make an offer or when rates drop to their benefit. The lower rate sometimes outweighs the cost of the extended lock fee.
If lock timelines are nearing their ends, borrowers can expedite the sale process by gathering relevant financial information for their lenders. Collect bank account numbers, pay stubs, tax forms, information about existing loans and expenses including rent or mortgages. Borrowers should be ready to quickly address any questions or deliver documentation to their lenders to keep the process moving swiftly to close before the lock expires.
Recover if Rates Drop
Locking in a loan is a bit of a gamble whether borrowers choose to lock or wait. If rates rise, the borrower has secured a better rate than if they’d waited. But if rates drop, buyers who locked still must close at the locked rate. Most lenders require borrowers to keep to the lock terms regardless whether the rate drops. However, some lenders offer a “float down” option (for a fee) which allows borrowers to get the lower rate if interest rates fall during their lock period. Buyers should carefully watch interest rates for months while house hunting, noting any trends indicating a good time to lock. Though, like the stock market, interest rates can be volatile and difficult to predict.
Therefore, borrowers should trust their lenders and discuss all of these variables before locking loans. When borrowers clearly understand the length and price of locks and their options if the locks expire or rates drop, then they can make educated decisions about locking their loans.
By Diana Fishlock
So there was that great coupon Aldi had posted but then removed it – because I guess it was so popular. Fortunately I saved it for you. Hopefully you can print it out by clicking on the image below. But hurry – it only lasts until Nov. 15, 2013. Cheers!
Frugal Meals Tags:
Money misconceptions run rampant in most marriages. Multiply one mistake by two people and what you’ll get is a recipe for disaster. Communication is key for a sustaining a marriage and a healthy bank account. Sometimes all it takes is a little education so if you’re married and struggling, try implement these strategies.
Secrets Lead to Setbacks
Any marriage counselor will tell you that secrets can silently kill a marriage. The same reigns true for your finances. Once you enter into holy matrimony, you have an obligation to be open and honest about all transactions which have the potential to affect your partner. Liberate your financial demons early on in the relationship. If you’re buried in student loans or credit card debt, it’s best to inform your partner. If they can’t accept you (and your debt), the relationship might not be destined to survive.
Merging debt is not the route to financial freedom. You’re more than encouraged to create a joint account with your partner for monthly expenses but avoid marrying your debt. Combining your debt has the potential to exacerbate your credit and stick you with a heavy load if the marriage doesn’t last for the long haul.
Lay Out Ground Rules
No one likes rules but they have their place in business affairs. Couples should have a serious discussion about budgeting, first and foremost. Sit down together and evaluate how much money you can afford to spend on common expenses like food, gas, and utilities. Then based on that number you can determine your disposable income for entertainment, activities, and events.
Estate Planning and Emergency Expenses
Unexpected expenses are just that—unexpected. Have a clear plan set up in case of emergencies with health, career, or kids. This includes writing up a living will and/or asset distribution. It’s crucial to think of worst case scenarios so that you can be prepared and ready to act if they occur. Health emergencies are some of the most expensive bills. A trip to the E.R. alone can cost you thousands of dollars and doctors tend to perform many tests which come at a high cost to the patient. Unfortunately, this is how many people fall into the grips of credit card debt. Debt management services, like Consolidated Credit, can provide help for those struggling with these problems.
Being prepared with a classified paperwork system can be your biggest asset. What if your partner becomes incapacitated and is unable to tell you where the important documents are located? When trouble strikes, the best defense is a plan.
To conclude, marriage is a serious decision which takes serious planning on both halves. Communicate openly about everything from grocery shopping to emergency scenarios, lay out clear ground rules, and never ever merge your debt.
Looking for something to do with the kids that won’t cost you a dime? How about catching a movie for free?
Wednesday, Wehrenberg kicks off its Free Family Summer Series. It features a different second-run family film each week through August 15th with a break during the week of July 4th.
Showtimes are at 10 a.m. every Wednesday and Thursday. Movies this year include Hotel Transylvania, We Bought a Zoo, Parental Guidance and much more.
Also, get a Family Summer series kid combo offer for popcorn and soda for just $5.
The art of buying a used car has become a skill that some truly specialize in. It’s a management of money, as well as a skill of negotiation. By having awareness of particular knowledge you can effectively take the price of a used vehicle and drop it considerably. Things to consider and pry on when you are pressing this avenue of life and adventure are the following:
1. Choose a reputable model- When choosing a used car, pick something that has a strong reputation. If you know it has a reputation to last a long time, usually a general consensus isn’t far wrong. A name such as Honda and Toyota are known for having vehicles that last with very strong engines.
2. Check the car out- Look into a car’s report and have the information of the car as a reference point for potential problems. It will tell you whether it has experienced any bad accidents and potential damages that might not be directly visible. A car’s report will tell you the number of accidents and the kinds of damage the car has experienced. It’s a very crucial piece of information.
3. Have the car inspected by a mechanic- For beginners, if the place selling the car, or the individual won’t allow this, or isn’t comfortable with you looking into this avenue, then that is a sign in itself to look elsewhere for your vehicle. A qualified mechanic will be able to look at the car and see things that you may not see as one looking at it from a convenient perspective. A mechanic will see it from the view of a professional and be able to point out potential hazards and listen for various noises that signify the car has a problem.
4. Pay attention to the year- This doesn’t mean to avoid older model vehicles. What this means is that certain vehicles have better components on particular years. A prime example is a Honda Civic, in the year 1999 their engine was supposed to be one of their most solid models, whereas the 2000 year engine model has reputable problems with leaks and damages. Sometimes looking into a vehicle and its most successful years and why it was successful is an avenue that will not only lead you to a better price on a vehicle, but overall a better car.
5. Negotiate- A used car is exactly that, a used car. It has room for negotiation as does any vehicle you buy. An asking price is a seller’s ‘hope’ to get, not really what they ‘expect’ to get. If you throw out a drastically low number you will most likely get back the number the dealer truly expects to get as a return negotiation. From there it is open season and a battle of wits and skill on your ends to see what kind of price you can achieve. Sometimes a few minutes of conversation can save you thousands of pounds.
When going to purchase a used car you have several avenues you can go down to try and get the most for your money. The options are often endless, and you can negotiate your way into a car that would normally cost much more money for much less expense. Buying a used car in the long run is a very cost-effective way of getting reliable transportation.
Author Bio: Bradley Taylor is an automotive blogger, journalist and enthusiast. He also contributes to other and on behalf of other motoring publications such as Jardine Motors, BMW, Nissan, Audi and Ford. Connect with Bradley on Google Plus.